In an interview with BNR Nieuwsradio, Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, discusses the recent raids on five French banks. They are allegedly suspected of dividend stripping.
The banks are suspected of allowing foreign customers to evade tax on dividends. These French banks involved cum/cum transactions. In these transactions, foreign investors who are not entitled to reclaim dividend tax sell their packages of shares to people in another country who are entitled to it, the professor said.
Dividend stripping, and therefore tax fraud, is very difficult to detect. It is important to see who is ultimately the entitled party to the dividend, and only he may levy dividend tax. However, it is very complicated to determine who is now the entitled party. Legally, it is always the buyer, but economically it can also be the seller, Kavelaars said.
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You can listen to the full broadcast from BNR Nieuwsradio, 28 March 2023, here.